Freehold Transactions

Question 1

Role of solicitor when acting for a buyer?

Answer 1

A buyer aims may go beyond speed and cost in this area.
As such a solicitor acting for the buyer must ensure:
* Seller has right to sell property
* Physical condition of the land is adequate
* Identifying all rights property enjoys
* The property is free from any security interest or will be on completion

Question 2

Role of solicitor in acting for a lender?

Answer 2

a lender will take a security interest over the buyer’s property. If the buyer does not repay the mortgage, the lender knows it can sell the property to cover its losses.
Usually, the same solicitor acts for both buyer and lender in residential purchases, because there are standard documents so no room for negotiation.
Solicitor will want to ensure:
* The physical condition of the land and building is adequate for the lenders needs and the property is worth enough to cover any losses.
* The security document is valid and enforceable
* There are no discrepancies in lenders understanding of the transaction and borrowers’ circumstances.

Question 3

Role of solicitor when acting for seller?

Answer 3

• Contract reflects the terms agreed between the parties
• Provide the buyers solicitor with what they need to proceed with purchase.
• Transfer legal ownership
• Collect money from sale

Question 4

Conveyancing process - 3 stages?

Answer 4

Pre-exchange
Buyer decides to buy property and agrees price, surveyor surveys property and reports on value and condition
- Exchange
- Enter into a contract to sell and buy property by completion date
- Buyer pays a deposit
- From this point on neither can pull out without consequences
Pre-completion
Buyers’ solicitor orders mortgage funds and ensure has fully money from client
Seller’s solicitor ensure they have all necessary paperwork to transfer the property on its completion
- Completion
- Buyers’ solicitor sends the purchase price to sellers’ solicitor
- Seller’s solicitor agrees to send the necessary paperwork to transfer the property to buyer’s solicitor
- Buyer gets keys
Post completion
Seller’s solicitor pays of seller’s mortgage and pays balance to seller
Buyers’ solicitor pays SDLT and registers buyer as new owner on land register

Question 5

Caveat emptor?

Answer 5

Latin principle of ‘buyer beware’
Seller is usually under no obligation to give the buyer all the relevant info that buyer may require. Its buyers’ solicitors’ job to thoroughly investigate.

Exceptions to caveat emport

• Misrepresentation
  o Can arise from estate agents’ particulars of sale, remarks by seller on viewing property, any communication from the seller
  o Seller cannot mislead buyer by concealing physical defects or answering questions dishonestly.
  o If they’ve been induced by misrepresentation have remedied under common law or under misrepresentation act
• Latent encumbrances and defects in title
  o Defined as something which is not apparent or discovered, of which it has the means to know acting reasonably and diligently.
  o Defects in title – something that brings into question the seller’s ownership of property or the rights and burdens that affect property.

Question 6

Taking instructions?

Answer 6

Legal title –
- Legal owners are names on land registry title
- Maximum no of 4 legal owners
- Must be over 18
- Legal owners hold the property on trust for the benefit of the beneficial owners
Beneficial title
- May not be same as legal owners
- Not registers at land registry
- No maximum no of beneficial owners
- Can be any age
Joint tenancy – collectively own the whole of the beneficial estate with each other, seen as a single entity. Right of survivorship applies.
Beneficial ownership – tenants in common – common where they want to have an interest they want to leave in their will.
Must be clearly stated on the TR1 – and failure to do so is professional negligence.

Question 7

Types of surveys?

Answer 7

Basic valuation – if a mortgage is being obtained, the lender will be on a basic valuation – cheapest option
Homebuyer report – more details and will be suitable for most aged less than 150 years
Full structural survey – if its listed has had extensive renovation or where extensive alterations are planned. – very expensive

Question 8

Types of mortgages?

Answer 8

Capital repayment mortgage – repays capital sums by monthly payments together with an interest amount
Interest only mortgage – borrower pays the interest on the land – means borrower pays less every month but then capital will only be repayed on the sale of the property
Endowment mortgage – not available in UK anymore